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As per the latest Economic Survey tabled in Parliament on July 22, India’s focus on maintaining macroeconomic stability ensured external challenges had “minimal impact” on the economy. It held that the economy carried forward the momentum it built in the preceding financial year into FY2024. The survey emphasised India’s real GDP growth by 8.2% in FY2024 – exceeding the 8% mark in three of the four quarters. 

Stark differences among global economies 

The survey stated that the Indian economy recovered and expanded in an “orderly fashion” post the coronavirus pandemic. It mentioned the real GDP in FY 2024 was 20% higher than the levels attained in FY 2020. The survey described it as a feat that “only a very few major economies achieved”. 

Read the full Economic Survey 2023-24

The survey goes on to state that growth prospects for the ongoing financial year “look good”, subject to geopolitical, financial market and climate risks. 

Referring to the International Monetary Fund (IMF)’s World Economic Outlook (April 2024) the survey observed that the global economic growth had been 3.2% in 2023. The outlook had also noticed “diverging growth patterns” among countries which were on account of domestic structural issues, uneven exposure to geopolitical conflicts and impact(s) from the tightening of monetary policies. In its latest edition published in July, IMF retained the outlook for FY 2024 and 3.2% for FY 2025. With respect to India, IMF revised upward the forecast for growth this year to 7%. This was attributed to the carryover trends and improved prospects for private consumption, particularly in rural areas. 

The investment thrust 

Gross fixed capital formation increased 9% in real terms in FY 2023-24, the survey mentioned. It argued that the government’s thrust on capital expenditure and sustained momentum in private investment boosted the capital formation growth. “Moving forward, healthier corporate and bank balance sheets will further strengthen private investment. The positive trends in residential real estate market indicate that the household sector capital formation is increasing significantly,” it held separately.

The survey further informed about fiscal balances of governments, both at the centre and state, improving “progressively” notwithstanding expansionary public investment. Tax compliances too have gained because of procedural reforms, expenditure restraint and increased digitisation, it argued. 

External balances subdued 

However, the report enumerated concerns about India’s external balance pressured by “subdued global demand for goods”, but claimed strong services export largely counterbalanced the scenario. As a result of the paradigm, current account deficit stood at 0.7% of the GDP in the now-concluded FY2024, improving from the 2% deficit (of the GDP) in the preceding financial year. For perspective, current account documents a certain country’s international transactions with the rest of the world. Trade is an important component of this indicator.